To take longkong first. There was no treaty barrier to our imposition of the tariff on Hongkon but to persuade her to take our decision quietly we made great play with the terms of the Crosland decision ie no quotas as well as the tariff except as envisaged by the decision and any going back on this means eating, inter alia, what Kir Rippon said in Hongkong.
I suppose that if Ministers, including Mr Rippon himself feel that they can plausibly argue that circumstances have sufficiently changed since these words were spoken in good faith, this is how one would get over this obstacle. Hongkong probably always took our protestations with a large pinch of salt; and while it is a difficult matter of judgment, on which I should not like to see what I say taken as the final or right word, it seems to me possible that Hongkong would fit in with our wishes on the right terms. The least negotiable or imposable extreme would be cut back on current Hongkong trading, without but even more with categorisation. The easiest for her to accept would obviously be a ceiling sufficient to cover whatever increase over current levels she might hope to achieve over the tariff without categorisation. Between these extremes there are various permutations on combinations.
The two possible attractions I see for her arc (1) that others who might grow at her expense would be held back and (11) that a sufficiently high ceiling might be regarded as setting a pattern for what might happen when a Community regime has to apply.
The Indians wanted us to continue with quotas and no tariffs. Rather than yield on this, and despite our aid offer, they forced us to denounce the TA I cannot see them now agreeing to quotas on top of the tariff. They feel very strongly and would argue that what they send us docs not really compete with our industry; they would never concede that what they might send, especially over a tariff, could be causing or threatening injury. It is difficult to judge, but it seems to me that they might prefer to leave us in the uncomfortable position of having to impose
I a ceiling on their imports rather than agree to anything. suppose that we could in fact fix a ceiling which would be unlikely in practice, given the tariff, to be restrictive. It
is very difficult, to judge whether this further high handed act would provoke damage to our interests commercially. Te feared it of the tariff and wild words were uttered but nothing adverse happened. It is loss to the Indians rather than us if they do things which discourage further British investment, but very big interests are involved in our existing investments. These can beharrassed and squeezed and they cannot avoid this by pullingout. It would be for the FCO to weigh broader, in the case Faldetan, political considerations. We had no commitments standing in
the way of our tariff policy and there have been no adverse reperqussions from it. I do not think we could treat India
NP In the case of Pakistan
2